Bank accounts must be unfrozen while disputed amounts remain secured in fixed deposits pending Magistrate orders.

The petitioner challenged the hold/freeze placed on his bank account maintained with Utkarsh Small Finance Bank, Account No. 1764017400906989, and sought its removal under Article 226 of the Constitution

The petitioner relied on Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, decided on 26 April 2024, where the High Court had directed that disputed cyber-fraud amounts be placed in fixed deposits while permitting operation of the remaining account

In the present case, the amount allegedly linked to the cyber-crime complaint was Rs. 4,100

1. Whether the petitioner’s bank account, which had been frozen pursuant to information or directions from crime/cyber agencies, ought to be unfrozen subject to safeguarding the disputed amount

2. Whether the disputed amount of Rs. 4,100 should be retained in a fixed deposit pending orders of the competent Judicial Magistrate under the applicable law

The Court exercised its jurisdiction under Article 226 of the Constitution to regulate the consequences of an account-freeze imposed in connection with an alleged cyber offence

It applied the principle laid down in Malcolm Murayis & Ors. v. State Bank of India & Others, W.P. No. 1100 of 2024, that where a bank account contains an amount allegedly connected with cyber fraud, the disputed amount may be segregated and placed in a fixed deposit, while the account may otherwise be permitted to operate

The Court further directed the police agency to proceed in accordance with Section 102 of the CrPC or the corresponding applicable provisions of the BNSS, and to obtain appropriate orders from the competent Judicial Magistrate within three months

The Court found that the facts of the present petition were materially covered by the earlier decision in Malcolm Murayis and applied that decision mutatis mutandis

Balancing the investigative agencies’ interest in preserving allegedly tainted funds against the petitioner’s right to operate his bank account, the Court directed the bank to retain only the disputed amount of Rs. 4,100 in a fixed deposit

The fixed deposit could be liquidated only upon an order of the competent Judicial Magistrate within three months, thereby requiring the police agency to take the necessary steps under the applicable criminal-procedure provisions.

If no such order was obtained within that period, the amount could also be withdrawn by the petitioner after intimation to the police agency

The bank was directed to unfreeze the petitioner’s account, while keeping Rs. 4,100—the amount allegedly linked to the cyber complaint—in a fixed deposit

The fixed deposit could be liquidated only pursuant to an order of the competent Judicial Magistrate within three months.

In the absence of such an order, the petitioner could withdraw the amount after informing the police agency